The role of P2P platforms in enhancing financial inclusion in the United States: An analysis of peer‐to‐peer lending across the rural–urban divide

Abstract

In this paper, we examine the role of peer‐to‐peer (P2P) platforms in enhancing financial inclusion from the borrowers’ point of view across the rural–urban dimension. We show that when number of bank branches decrease in a rural community, the P2P loan requests increase if there is at least one bank branch in the community allowing people to participate in the P2P market. We also find that the number of P2P loan requests from urban areas is higher when such areas have fewer pawnshops per capita. Our results suggest that P2P enhances financial inclusion of those lacking traditional institutions in rural communities and offers an alternative to those with fewer fringe banks in urban communities.

The fintech transformation of banking: Governance dynamics and socio-economic outcomes in spatial contexts

“…In the North, the deregulation of open banking and the entry of nonbank commercial entities improved the quality of financial services (Döderlein, 2018;Hodson, 2021;Passi, 2018;, and stimulated e-Commerce and consumption (Chen et al, 2017). Select disadvantaged market segments turned to alternative finance, e.g., P2P lending (Maskara et al, 2021;Jagtiani and Lemieux, 2018;Suryono et al 2021). However, regulatory sandboxes with fintech participation are perceived as amplifying fintech risk behaviours at the cost of customer protection Brown & Piroska, 2021).…”

The Role of Social Media in Financial Risk Prediction: Evidence from China*

“…Unsupervised representation learning has been highly successful in the domain of NLP (Dai and Le, 2015). Embeddings from Language Model (ELMo) (Maskara et al ., 2021), Generative Pre‐Training (GPT) (Arner et al ., 2019) based on the Transformer model (Suominen and Toivanen, 2016) provide more structured memory for handling long‐term dependencies in texts. One appealing example is XLNet (Yang and Luo, 2017).…”

Financial innovation regulations and firm performance: Evidence from Chinese listed firms

“…More importantly, Merton (1995a) points out that financial innovation relies on major changes in related financial regulations. Subsequent studies in this field focus on the relationship with bank performance (Phan et al, 2019), credit supply (Sheng, 2020) and the business operation of P2P platforms (Maskara et al, 2021; Zhong & Jiang, 2020). These studies have not explored the influence of financial innovation regulations and the relationship with firm performance.…”

“…Fintech refers to financial technologies used to automate processes in the financial sector from routine, manual tasks to non‐routine, cognitive decision making (Das, 2019). Fintech is able to alleviate financial exclusion (Zhong & Jiang, 2020) and increase the availability of financial services when the number of bank branches decreases in a rural community (Maskara et al, 2021), negatively affect bank performance (Phan et al, 2019), and facilitates banks' credit supply to small and medium enterprises (SMEs) (Sheng, 2020).…”

“…This study fills in the research gap and shows that such impacts of financial innovation regulations on firm performance may be attributed to the investments in P2P platforms and financial constraints. Third, this paper provides empirical evidence to explain the impacts of financial innovation regulations on banks and how the effects relate to firm performance, considering the conclusion of extent literature (Maskara et al, 2021; Phan et al, 2019; Zhong & Jiang, 2020). Fourth, the findings in this paper indicate that effects of regulations on firm performance differ for smaller and larger firms, SOEs and non‐SOEs, implying that authorities may take diverse actions to achieve better implementation of financial innovation regulations.…”